Tag Archives: GST

Following close on the heels of national travel trade associations, the Maharashtra Tour Organisers Association (MTOA) recently conducted a seminar on the impending GST for its members in Mumbai. It was conducted on June 5, 2017, by noted Service Tax expert Manish Gadia, Partner, GMJ & Co, who conducted similar sessions for TAAI as well as IATO. Sudhir Patil, President, MTOA, says, “We welcome the new GST regime though there is a lot of fear factor attached to it. Complications are expected. But I hope that more seminars will help us make this a smooth transition.” The association also launched its website (www.mtoa.co.in) on the same day.

Travel Agents Association of India (TAAI) hosted a session on Goods and Services Tax (GST) for its members in Mumbai. Service Tax expert CA Manish Gadia from GMJ & Co gave an insight on how GST will come into play. TAAI has initiated GST training sessions in cities such as Kolkata, Ahmedabad and now Mumbai. Revealing more is Jay Bhatia, Hon. Treasurer & Tourism Council Chairman, TAAI. “By June 30, we plan to complete these sessions in all the 20 cities across the country where TAAI is present. Subsequently by July-August we will have detailed session as the government gives more clarity on GST. Currently, we are not happy with the GST rates and we will be making representation through FAITH to the government which is definitely going to be reviewed by the government but as of now the current intention of the government is to implement GST from 1st of July. Once it is implemented we have assurance from the government that they will look into the issues faced by agents and take the right steps,” he said. Sampat Damani, Chairman – Western Region, TAAI, commented, “Although we received notifications from the government but still a lot of things are not clear. With GST being very complex we see tourism and hospitality industry getting a big hit. Like demonetisation we may see day to day changes by the government which will be a chaos for the next 6-8 months. We were supposed to go into a paperless scenario but here with 37 returns to be filed annually we are taking a step backward instead of going forward.”

The Travel Agents Association of India (TAAI) has started conducting educational workshops on GST for its members across all chapters along with its consultant and Service Tax expert, Manish Gadia, Partner, GMJ & Co. Jay Bhatia, National Treasurer and Chairman (Tourism Council), TAAI, says, “We did a session on GST in Ahmedabad on Saturday, May 27 and are doing another one in Mumbai on June 1. We have planned this pan-India for our chapters and the dates and cities will be announced soon.” The association will conduct another one in Lucknow on June 8. Gadia, who recently conducted a session on the same topic for Indian Association of Tour Operators (IATO) members in Mumbai says, “The main doubt of the IATO members was whether they have to go for five per cent or 18 per cent, whether they have both options, what will be the place of supply, and how can they get the maximum benefit from GST. Any change will always have some pros and cons. Introduction of GST is one the biggest economic reforms for India. So the tour operators will have to change the way they are doing business today.”  

Following the recent announcement of the 28 per cent GST rates for hotels in the luxury category and those that charge a tariff of more Rs. 5000, to be applicable from July 1, the hospitality industry in South India is protesting the move. K. Syama Raju, President, SIHRA, says, “The recent developments and policies belie the importance of our industry and fail to recognise that this Industry is one of the largest employment generators and net foreign exchange earners with an expected exponential growth. It is imperative that we impress the government of our displeasure on these recent developments that are adversely affecting our industry. We commend the authorities for recognising the value of tourism by lower GST rates for one value chain of tourism i.e. travel, tours and transportation but are extremely disappointed that for the other part i.e. hotels & restaurants a regressive GST taxation regime has been applied. Hotel & restaurant businesses are striving to create higher standards and get higher ratings but the more punitive is the GST regime. Economic & visionary development of the industry cannot simultaneously be branded by exclusivity. The main objectives of GST is to minimise the cascading effect of taxation, harmonise the tax base, laws and administrative procedures across the country, creating a common playing field to promote healthy competition amongst the states that will ensure certain standards across the industry and most importantly minimizing tax slabs to avoid classification issues. The industry is coming together to protest on May 30, 2017, to register dissent against the adverse impact of the proposed GST rates in southern states.”

Various national travel trade associations in the country are rushing to conduct workshops on GST for their members and inform them on how the tax structure will impact their business. The Indian Association of Tour Operators (IATO) has organised a seminar with noted Service Tax expert, Manish Gadia, Partner, GMJ & Co to talk on Service Tax and GST and to reply to member queries. The Travel Agents Federation of India (TAFI) has also conducted a speaker session on GST. Following close on its heels will be the Travel Agents Association of India (TAAI). Revealing this is Jay Bhatia, National Treasurer and Chairman (Tourism Council), TAAI, who said that the association will be doing a series of workshops on Service Tax and GST along with consultant Manish Gadia across the country.

P. K. Anish Kumar, President, ATTOI, was quite disappointed with the GST announcement. “Most of the foreign travellers have concerns regarding safety, security, cleanliness in India and thus choose 4 or 5 star hotels to stay in. This does not mean they are rich but prefer safe, quality accommodation. Now with 28 per cent tax on hotels and 5 per cent GST to be paid by agents kills the industry as the effective tax to be paid will be 33 per cent. How will we compete with destinations like Hong Kong ,which has no tax on hospitality industry? Earlier tax in Kerala was 19 per cent even on 4 and 5 star hotels and now competitiveness of the industry is thrown off with direct 28 per cent. A houseboat in Kerala costs above Rs. 6000 and the tax will deter the USP of the destination. India will not be seen as a long haul destination any more as packages will become shorter due to the expenses to be incurred by the foreign tourists. Tourism has to be seen as an employment and revenue generator and government’s approach to penalise tourists and earn money from them will ruin the tourism industry overall,” he claimed.

The Federation of Associations in Indian Tourism and Hospitality (FAITH) has suggested an upper GST rate of 12 per cent for the tourism and hospitality industry and handed its detailed recommendations to the Ministry of Finance. The industry comprises of air travel agents, business exhibition services, hotel and hospitality services, tour operators, rent a cab and vacation ownership. The representation has been made considering strategic forex, employment, economic and GST rationale and rates for tourism, travel and hospitality sector of India. An upper limit of 12 per cent has been suggested for hotels and hospitality and vacation ownership segment. For the air travel agents the recommendation was given to continue presumptive rate on all income and keep GST at 1 per cent or less. For the tour operators, FAITH requested to introduce a presumptive rates mechanism of GST at 1.2 per cent considering difficulty of getting GST input credits from unorganised sector and the burden of compliance of registration with different states. It has been requested to exempt outbound tour operators and business exhibitions selling outbound from India from GST since provision of services are out of India. In the case of rent a car, a GST rate of 5 per cent has been suggested failing which, maximum 12 per cent has been deemed acceptable. FAITH has urged for a special GST exemption on forex income for tour operators, hotels and businesses earning forex if it can be a criteria with MoF for GST. Addressing the adventure tourism industry, FAIH has requested MoF to consider special GST exemption based on J&K and a very high component of local, unorganised labour involved.

With a view to sensitise stakeholders about the new GST scheme that is to replace a multitude of indirect taxes currently being levied, the Service Tax zone of Kolkata has flagged off a mobile help centre. A network of trained officers will tour the city of Kolkata, conducting seminars, to help stakeholders transition from the Service Tax and Central Excise schemes to the GSTN (GST Network), a front-end system developed by the Government of India as a single interface for the GST roll-out. New registrants will be able to register on-the-spot.

Global airlines’ body IATA has sought an abated rate of GST on flight tickets, saying the tax burden on the aviation sector was already high and the GST regime should conform to global standards and principles. Maintaining that the International Air Transport Association (IATA) has been ‘working closely’ with the Goods and Services Tax (GST) Secretariat here to address some issues of concern to airlines, Director General of IATA, Alexandre de Juniac said, “The GST regime needs to adhere to international standards and principles.” “We have called for a zero-rating for international flights when the GST comes into effect next April. This seems unlikely. To limit its damage to the sector’s competitiveness, we would at least hope for abatement in the rate,” de Juniac said. He said the airlines in India faced “an onerous tax burden, including the imposition of service tax to services rendered abroad, including those for overflight charges, global distribution systems and international tickets.” This, he said, was “in contravention of international principles established by governments” through the UN body International Civil Aviation Organisation (ICAO). The IATA Director General and CEO, who met top officials of the government and Indian carriers during his two-day visit here, said he had shared these and other concerns with the government.

The Outbound Tour Operators Association of India (OTOAI) has crossed the 400 members mark till now and is aiming at 30 per cent growth in membership. The association that 407 registered members called on them to stand united on the issue of Goods and Services Tax (GST). “We would like to stand together for GST. I would request all our members to come together and make suggestions regarding that. We don’t have much time in hand for this and GST is a big deal,” said Guldeep Singh Sahni, President, OTOAI, said during the 4th Annual General Meeting (AGM) of OTOAI. The main agenda of the AGM was to present the accounts for this year.  The association also discussed that it is going to work closely with its partner DMCs and NTOs. Sahni said, “We will try to benefit our partner NTOs and enhance their product development for our customers.”